The Palestinian president, Mahmoud Abbas, made a distinction between Israel within its internationally recognised borders and its settlements in the Palestinian territories. Photograph: Carolyn Kaster/AP

Palestinian president Mahmoud Abbas has been accused of being a traitor by activists after publicly rejecting calls for a boycott of Israel.

His unambiguous statement, made in the aftermath of Nelson Mandela's death, has fuelled a bitter debate on the legitimacy and efficacy of sanctions over Israel's treatment of Palestinians.

However, Abbas distinguished between Israel's borders and its settlements in Palestinian territories. "We do not support the boycott of Israel. But we ask everyone to boycott the products of the settlements."

His comments infuriated the boycott movement, with some activists describing Abbas on Twitter and talkback threads as a traitor and a collaborator. After Mandela's death, the boycott movement has been boosted by comparisons with the anti-apartheid campaign in South Africa and the decision last week of the American Studies Association (ASA) to boycott Israeli academic institutions.

The boycott movement claims it is on a roll, citing a recent EU prohibition against giving grants or funds to bodies with links to settlements, a warning by the British government that firms risk damaging their reputations if they have dealings with Israeli enterprises across the Green Line, and the decision by a Dutch company to sever links with the Israeli water company, Mekorot.

This year Stephen Hawking declined an invitation to a conference in Jerusalem. Even the British consulate in East Jerusalem, home to her majesty's representative to the Palestinian Authority, operates an informal boycott policy, declining to serve settlement wines, water or other produce at functions.

However, the call for sanctions against Israel and/or its settlements has prompted comparisons with the boycotts of Jewish businesses by the Nazis and their supporters in the 1930s. Some opponents argue that boycotts aimed at the Jewish state can never be free of the taint of anti-semitism.

The Boycott, Divestment and Sanctions (BDS) campaign, set up in 2005 by more than 170 Palestinian civil society organisations, expects next year "to cross even higher thresholds in its drive to isolate Israel, just as South Africa was isolated under apartheid", said Omar Barghouti, one of its founding members.

The ASA's decision was "fresh evidence that the BDS movement may be reaching a tipping point on college campuses and among academic associations", he added. Two other US academic bodies – the Native American and Indigenous Studies Association and the Association of American Asian Studies – have also backed the boycott movement.

Barghouti said: "Any Palestinian official who lacks a democratic mandate and any real public support who today explicitly speaks against boycotting Israel only shows how aloof he is from his own people's aspirations for freedom, justice and equality, and how oblivious he is to our struggle for our inalienable rights."

Samia Botmeh, a lecturer at Birzeit university in the West Bank and a leading member of the Palestinian Campaign for the Academic and Cultural Boycott of Israel, said restricting a boycott to settlements was to focus on the consequences, rather than the origins, of the occupation. "Palestinians are angry and feel let down by Abbas's comments," she said. "He is contradicting the popular will of Palestinians."

However, thousands of Palestinians do business with Israel, work in West Bank settlements or in Israel and buy Israeli goods. Imports to Palestine from Israel are worth $800m a year.

"Of course we deal with Israel – everything in our life is controlled by Israel," said Botmeh. "But there are choices we can make, and we can call on the rest of the world to act."

Many who abhor Israeli policies towards the Palestinians reject the idea of individual and institutional sanctions. Fania Oz-Salzberger, history professor at Haifa University and daughter of novelist Amos Oz, said she was opposed to "any kind of academic boycott, whether it be of Israel or the settlements, including Ariel [Israel's settlement university] or any other academic institute in the world, barring extreme situations such as North Korea. Academic and intellectual exchange should operate above political considerations."

Noam Chomsky supports a settlement boycott, but has said a boycott of Israel was "a gift to Israeli hardliners and their American supporters".

Many observers expect the boycott movement to gain momentum should peace negotiations between Israel and the Palestinians fail to produce a deal. Andreas Reinicke, the outgoing EU envoy to the Middle East, warned last week that momentum in favour of a settlement boycott would grow without a peace agreement.

Less than two years ago, only two EU countries – Britain and Denmark – backed the labelling of goods originating in settlements as such in order to allow consumers to make informed choices. Now 14 EU states support the move. "There is movement in this direction," he said.

• This article was amended on 23 December 2013 to clarify that it was not Omar Barghouti or Samia Botmeh who accused Abbas of treason.